IMPACT OF FOREIGN CAPITAL ON ECONOMIC GROWTH IN INDIA: 1992 – 2009
IMPACT OF FOREIGN CAPITAL ON ECONOMIC GROWTH IN INDIA: 1992 – 2009

Summary/Abstract: Generally, it is not possible for a developing country like India to grow without sufficient import of capital because of the gaps exist in domestic savings and capital requirements. During the initial stages of development, domestic savings are normally not adequate to finance the development projects required to achieve faster economic growth. Globally strong consensus has emerged that the achievement of more dynamic economic growth requires a greater role of the foreign capital. There are many forms of the foreign capital inflows including Official Aid, Commercial Borrowings, Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI). There was a surge in foreign capital flows into India after 1992–93, because of drastic changes in India’s policies regarding the FDI and FPIs. Since then Government of India have been relaxing capital control measures and taking large number of policy decisions towards the improvement of local financial infrastructure. Because of this, foreign capital has become an integral part of the development strategy of India. The main objective of the present study is to investigate the impact of foreign capital (FDI and FPIs) on economic growth of Indian economy during the period 1992–2009.

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